Cameco, Inc. v. Gedicke

• Decision Date: 31 March 1997
• Citation: Cameco, Inc. v. Gedicke, 690 A.2d 1051, 299 N.J.Super. 203 (N.J. Super. App. Div. 1997)
• Parties: CAMECO, INC., Plaintiff-Appellant, v. Donald GEDICKE, individually and d/b/a Newton Transport Service, Newton Transport Service, and Priscilla Mueller, Defendants-Respondents.
• Court: New Jersey Superior Court — Appellate Division

Page 203

299 N.J.Super. 203

690 A.2d 1051

CAMECO, INC., Plaintiff-Appellant, v. Donald GEDICKE, individually and d/b/a Newton Transport Service, Newton Transport Service, and Priscilla Mueller, Defendants-Respondents.

Superior Court of New Jersey Appellate Division.

Argued Feb., 1997.

Decided March 31, 1997.

Robert P. Donovan, Livingston, for plaintiff-appellant (Fox and Fox, attorneys; Mr. Donovan, of counsel, and on the brief).

James F. Keegan, West Orange, for defendants-respondents (Bendit, Weinstock & Sharbaugh, attorneys; Mr. Keegan, of counsel; Mr. Keegan, Sherri Davis Fowler, and Shari T. Competiello on the brief).

Before Judges MICHELS, MUIR, Jr. and COBURN.

The opinion of the court was delivered by

MICHELS, P.J.A.D.

Plaintiff Cameco, Inc. (Cameco) appeals from a judgment of involuntary dismissal of the Law Division entered in favor of defendants Donald Gedicke, individually and d/b/a Newton Transport Service (Gedicke), Newton Transport Service (Newton), and Priscilla Mueller (Mueller) at the conclusion of its proofs in this action to recover damages on theories of breach of fiduciary duty and loyalty, conversion, unjust enrichment, and tortious interference with its contractual rights and economic advantage.

The proofs presented on Cameco's case show that Cameco imports, packages, and delivers food products including ham, fish, and poultry. Cameco delivers its products through the use of outside common carrier trucking companies. Cameco's shipping costs constitute approximately fifteen percent to twenty percent of its operating expenses. Gedicke was employed by Cameco for nearly nine years, from March 1984 to January 1993, as its sole traffic warehouse manager. Gedicke's duties included, among other things, arranging for the shipments of Cameco's goods by common carrier. Gedicke arranged routine shipments from Cameco's warehouse where he scheduled when various common carriers would arrive to pick up Cameco's products for delivery. Consequently, Gedicke was aware of Cameco's delivery rates, its delivery routes, the identity of its customers, and the identity of its common carriers. Cameco considered this information confidential, and it never gave Gedicke permission to use it for any purpose other than discharging his duties as a Cameco employee.

In July 1990, Gedicke and Mueller established Newton, a trucking brokerage business operating from their residence. Mueller, who was not employed outside the home, was primarily responsible for running Newton, but she generally relied upon Gedicke's superior knowledge. Gedicke himself participated on nights and weekends. At least fifty percent of Newton's business was conducted between 8:00 a.m. and 5:00 p.m., hours between which Gedicke was generally at work. The work Gedicke and Mueller did with Newton was identical to the work Gedicke did for Cameco.

Newton was in the truck brokering business. It arranged for the transportation of goods for third parties on a commission basis. Newton would contract with a person or entity, often the traffic manager, wishing to have goods shipped. It would then contract with a trucker to ship those goods. Newton would be paid by the shipper and billed by the trucker. Newton paid the trucker out of its payment from the shipper, minus Newton's commission.

Gedicke employed the knowledge he gained at Cameco, including knowledge as to truckers, rates, and routes, in his operation of Newton. In over 600 instances, Gedicke/Newton had arranged for a trucker transporting Cameco's goods to also transport goods for Newton's customers. The trucker would transport both Cameco's goods and Newton's goods, sometimes to the same destination. Gedicke testified that this was normal with common carrier truckers because they would transport goods originating from various sources. Even after Gedicke was no longer employed by Cameco, goods brokered by Newton would be transported to a destination with goods from Cameco.

Gedicke arranged to have the truckers, which he used as Cameco's traffic manager to transport Cameco goods, transport goods for Newton from other food distribution businesses like Cameco. At least two of those other food distribution businesses, Atalanta Corporation and Kohler Delicatessen Meats, were "direct" competitors of Cameco. Gedicke knew at least that Atalanta Corporation was a competitor of Cameco. Moreover, Gedicke was also in contact with the purchasers of these products, that is, with the entities which were buying Cameco's and Atalanta Corporation's products. Gedicke was arranging for Cameco's customers to receive goods both from Cameco and from Cameco's competitors via the same common carrier trucker.

Gedicke admitted that sometimes he would arrange for the goods contracted through Newton to be delivered before Cameco's goods when both of those shipments were being transported by the same common carrier. Gedicke claimed that because of the location of the deliveries and the route the trucks were following, sometimes this arrangement made practical sense and Cameco's goods did not suffer by it. Additionally, sometimes Cameco's goods would be picked up before Newton's customers' goods and thereby, the product information contained on Cameco's packaging/labeling would be exposed to Newton's customers, some of whom were competitors.

During the course of his employment at Cameco, Gedicke used Cameco's telephone to operate Newton by calling his own customers (the other food distribution businesses), the truckers, and the companies receiving the goods. Gedicke paid for the calls himself by making them through the use of his telephone credit card. Gedicke prepared an analysis of the phone records of the calls he had made from Cameco between July 1990 and November 1992. Based on a regular work schedule, eight hours a day, five days a week, (that is, ignoring any additional overtime hours he may have worked, but also vacation time), Gedicke made 13.8 minutes of calls per day, including personal calls. Though the calls averaged only 13.8 minutes a day, it is not known how many minutes a day Gedicke spent on incoming calls relating to Newton.

Gedicke also admitted to having informal meetings relating to Newton's business with truckers who had arrived at Cameco to pick up Cameco's goods. He never told anyone at Cameco or any of his customers that he was employed with both businesses because he felt no need to tell them. He admitted that until July 1993, he was operating without an ICC license, but claimed that he did not need a license because he was working under the authority of the truckers. In August 1992, Cameco reprimanded Gedicke because he had failed to regularly inspect off-site warehouses, a duty which attached to his position. However, Gedicke denied that his failure in that respect was caused by or connected to his participation in Newton. Jerry Perl (Perl), Cameco's president, testified that he did not know why Gedicke had failed to inspect the warehouses, but thought Gedicke had told him he had been too busy or had forgotten.

Gedicke testified that his participation in Newton did not in any way interfere with his duties at Cameco. In fact, Gedicke regularly worked unpaid overtime at least three days a week and, according to an analysis he had prepared, Cameco saved money because of Newton. The additional freight that Newton placed on the trucks enabled Cameco to negotiate a lower transport rate from the trucker. Instead of having to pay the rate for a truck which is less than fully loaded or even the rate for a full truck load, Cameco paid less than the full truckload rate.

Gedicke was discharged by Perl on January 18, 1993, after Cameco had become dissatisfied with his performance. Specifically, Perl was dissatisfied with Gedicke's failure to negotiate lower freight rates for Cameco, his failure to inspect Cameco's off-site warehouses, and the increased amount of overtime he and his subordinates were working. Cameco allegedly was not aware that Gedicke had been operating his own trucking business while he was employed at Cameco. However, after Gedicke was discharged, Cameco demanded that Gedicke sign a covenant not to compete. Apparently, Cameco had a policy that persons leaving their employment must sign a covenant in order to have their pension and/or profit sharing funds turned over or released to them. Gedicke signed the agreement.

Within two weeks of Gedicke's discharge, Cameco learned of the existence of Newton from a trucker with which Cameco routinely contracted. Also, two of Cameco's normal truckers allegedly dropped their rates for Cameco, but Gedicke disputed that the alleged decrease was connected to him or Newton, claiming instead that it was market oriented. According to Scott Maier, a certified public accountant presented by Cameco as an expert witness, fifty-four percent of Newton's total reported gross receipts from 1990 to 1992 were from shipments which also included Cameco goods. He also estimated that approximately thirty-nine percent or $10,141 of Newton's net profits were from shipments which included Cameco goods. However, Cameco admittedly never engaged in the truck brokering business.

At the conclusion of Cameco's proofs, Gedicke moved for a judgment of involuntary dismissal pursuant to R. 4:37-2(b). The trial court believed Gedicke's testimony and found as a fact that "most of the work that was performed in ... connection [with Newton] was performed by his wife at home and by him primarily on weekends and times when he was at home in the evenings.... [H]e stayed on well beyond the time that he was required to be employed ... [and] at most he diverted 15 minutes a day towards" Newton. The trial court also found that Perl "exaggerated" ... what constitutes any kind of competition with his business." The trial court also found that Gedicke had not breached his duty of loyalty.

As to Gedicke's duty as an employee not to compete, the trial court did not find ...